Donating stock is a powerful way to reduce your tax liability while supporting the causes you care about. It allows you to give more generously and potentially avoid capital gains tax. However, the IRS sets specific limits based on the type of stock and the recipient organization. Here's a breakdown:
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Long-term appreciated stock (held over 1 year) donated to a public 501(c)(3) charity → Deduction limit: 30% of your Adjusted Gross Income (AGI) IRS Publication 526 – Charitable Contributions
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Long-term appreciated stock donated to a private foundation → Deduction limit: 20% of AGI
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Short-term stock (held under 1 year) donated to any qualified organization → Deduction limited to cost basis, not fair market value → Overall limit: up to 60% of AGI
Carryover Rules
If your donation exceeds the AGI limit for the year:
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You can carry forward the excess for up to five years
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The carryover retains its original deduction limit (e.g., 30% or 20%)
Learn more about carryovers in IRS Publication 526
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